| Do you believe it is necessary for small business | | | | indicators you should be focussing on. |
| owners to study bookkeeping or accounting? | | | | On the other hand, many small business people |
| There is definitely an advantage to understanding | | | | are forced to study some accounting because |
| accounting, particularly as your business grows, | | | | they use general ledger accounting programs for |
| however I don't believe it's necessary for small | | | | their bookkeeping. Unfortunately, many don't |
| business owners to study accounting. Most small | | | | grasp the concepts and some feedback I receive |
| business owners can keep accurate records using | | | | is that many people are unable to provide records |
| a simple system like reviewing Cash Flow into | | | | that are accurate and reconciled to their bank |
| Action to help with strategies to improve your | | | | account. |
| business. | | | | This has several consequences - First, the |
| Although studying accounting is unecessary, | | | | information they are using to run their day-to-day |
| business owners should have a good | | | | operations may be misleading. Second, - their |
| understanding of profit margins because small | | | | external accountant (who charges you for their |
| changes in margins can have a large impact on | | | | time) has to spend more time than necessary |
| profit. Similarly, most businesses have a number | | | | processing your work, or may lodge returns with |
| of key indicators relating to revenue and | | | | the tax authorities that are not accurate leaving |
| productivity that will tell them how their business | | | | you exposed to potential penalties. Lastly, - it can |
| is performing. For example, in my business it is | | | | mean that you cannot afford to spend time with |
| important to focus on sales revenue, cash flow | | | | your accountant working on understanding your |
| and other key performace indicators. Once again, | | | | business because your budget has been |
| this does not require a study of accounting but a | | | | exhausted. |
| good accountant can help you work out the key | | | | |